Seconds make a difference in trading and can score huge profits in a trade if you have access to the information about a company a minute or two before the rest of the newsmakers, investment reports and the general public. Warren Buffett’s Berkshire Hathaway subsidiary Business Wire has decided to cut off the high-frequency trading firms that were paying reportedly thousands monthly to get news releases and economic reports through direct feeds from the company, according to breaking news from CNBC this afternoon.
This seconds and minutes of access to news financial reports and other pertinent news has been the burr under the saddle of many on Wall Street to Main Street. A long time coming had a news release from Business Wire Chief, Cathy Baron Tamraz, who stated that, ‘the company had done ‘nothing wrong’ but that the "article may have caused some misperceptions, and that was of deep concern to us.’
It was an issue that traders who made their livelihood on trading could get the jump on the rest of investors through buying Business Wire and receiving preferential access online sooner. The perception alone of having speedy access to financial data in a minute gave concern on the ethics of trading on the information ahead of everyone because computers made the seconds possible.
New York Attorney General Eric Schneiderman called the company's decision a ‘tremendous victory for our effort to eliminate advance trading on market-moving information.’ He said it showed a commitment to ‘being a responsible industry leader.’
Business Wire gave up to the minute news to the intermediaries Reuters, Bloomberg and Dow Jones, which gave them the advantage with high end computers to relay the significant price movement data to the traders. Traders have the advantage then of buying shares of a particular stock for their clients and inventory or unloading stock for their best clients before any significant losses.
The Wall Street Journal said, 'the gap, measured in tiny fractions of a second, could have allowed computers deployed by high-speed traders to sell or buy stock slightly before others received the news—a ‘fleeting but lucrative edge.’
Thomson Reuters, the media and financial data provider, stopped its practice of releasing the University of Michigan consumer confidence survey two seconds early to traders willing to pay extra to obtain it. The movement caused concern that activity traded ahead of the market and all other investors.
It is well known from Buffett’s own statements that he does not even have a desk top computer. He does not do e mail correspondence either. He has made it public that he has used the same cell phone for years- and it is not a smartphone. He has however, put up a twitter account @Warren Buffett.
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